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I have had the chance to read today’s text, the speech of the Bank of Canada Governor Stephen Poloz, and he is full of uncertainties.

The bias is clearly towards higher rates, but it is not the kind of urgency that you’d expect someone who had just raised the rate to back-to-back meetings.

«The progress that we have seen tells us
the shots we have taken to further ease monetary policy in 2015 was the right thing to
n’. At a minimum, that additional stimulus measures are no longer necessary. But
there is no predetermined path for interest rates from here,» Poloz said in the conclusion of his speech.

He went on to say that the data will be data dependent, could be surprised in either direction and will «feel our way with caution».

Most of the discourse tends to focus more on the downside risks. Poloz notes that inflation is below target for years and that «we do not yet know the full extent of the
the economy of the reaction to various macro prudential measures aimed at
the imbalances on the housing market.»

Before the speech, the market price of 38% chance of October travelled to the foot and has a 68% chance that he would come in December instead. That rises to 90% in March.

After the reading of the word, the possibility of an October ride sounds closer to 5% and less than 50% in December.

In the longer term, this line really stands out to me:

«There are reasons to think that the interest rate
increases may have a more significant impact on the economy and inflation, and the
they have done it in the past.»

This is a strong signal that, even if the BDC is optimistic in 2018 and beyond, we’re not going to see back-to-back hikes. Instead, it will be at a pace closer to two increases a year.

What I expect in the coming week is for Canadian economists to move away from the forecast in October of hikes.